This is the seventh installment of a multi-part series on how to plan, start and grow your pizzeria business

So far we’ve covered how to define and refine your vision for your pizzeria; by now, you should know what your company will do, who it will serve, what you will stand for, and what your customers will experience. The next steps are to map out your strategy for bringing your pizzeria to fruition and satisfy any government and legal requirements. Essentially, this is the “get your ducks in a row” stage that is necessary to build a foundation for long-term success. Follow each step to make your transition from concept to launch date as smooth as possible and avoid potential business-killing problems down the road.

Create a business plan

A business plan is your map to success; or at least, the path you think will lead you to success. More importantly, a business plan will force you to solve problems before they arise.

When you complete a business plan, you’ll figure out exactly how much you’ll need to invest to start and operate your pizzeria before it’s profitable. You’ll determine how you’re going to market your business, how many employees you’ll need, and make projections to help you make sound business decisions.

Creating a business plan can seem a tedious process, but it’s absolutely necessary if you want to give your pizzeria the best chance to succeed.

Here are some excellent resources for creating a sound business plan:

Keep in mind that business plans evolve, and you should revisit yours regularly to see if you need to make adjustments. At the very least, review your plan monthly to see if you’re on the path you set out on.

Business creation and organization

You’ll need to formally file your business with government agencies before you open your pizzeria. Regulations vary by location, but you’ll most likely need to file with your state, county, and even federal governments. As a food service establishment, you’ll also be subject to health department inspections, fire inspections, and any other inspections required by your local governments.

Make sure you understand what documents you need to file and what types of vendors licenses or other requirements you must satisfy well before you launch your business. You also need to know how you’re going to organize your business: a sole proprietorship, a partnership, an LLC, or a corporation.

The Small Business Administration offers free advice to point you in the right direction, and government agencies can help you identify the paperwork you need to file, but the best strategy is to hire an experienced business attorney to ensure you’re operating a legal business. The last thing you want is to be shut down on opening day because you forgot to file a document!

Finally, be sure to consider what trademarks or other protections you might be entitled to or need to protect your business assets. Again, a business attorney can prove invaluable in this arena. An attorney might set you back $1,000 to $2,500 for startup documents and to draft an operating agreement, but that pales in comparison to potential fines and loss-of-business that could arise due to even a small oversight.

Accounting and bookkeeping

You’ll need a dedicated accounting/bookkeeping process to keep track of your profits and losses plus stay in the IRS’s and your state tax department’s good graces. Many small business owners do their own bookkeeping; others have an employee (or, often, a spouse) handle it. As long as every penny is properly accounted for, it doesn’t matter what bookkeeping method you use. Again, software can make bookkeeping much more efficient, which is why programs like QuickBooks and Wave Accounting are popular choices.

Regardless of your bookkeeping method, you will want to hire an accountant to review your books and handle your taxes. You might be subject to monthly, quarterly, and/or annual taxes on everything from sales to property, so having an experienced accountant can help you keep everything in order and filed on-time.

Experienced accountants also know how to help you plan for taxes and minimize your overall tax burden by taking advantage of tax credits and tax write-offs. Accountants cost money, but good accounts save more than they cost – and they keep you out of legal hot water.

Financing

You’ll cover this in your business plan, but it’s worth noting you’ll probably need to get financed in order to start your pizzeria. Most small business owners do not have enough out-of-pocket funds to finance their own startups, so you’ll need to be able to attract banks, credit unions, and/or investors in order to make your dream of pizzeria ownership a reality.

Financing starts with you and your credit history. Keep in mind you’ll be expected to pony up some funds upfront, so having a healthy savings account will help. Good personal credit will also go a long way toward opening the right doors.

Before you seek financing:

  • Find out your credit score and improve it if needed (Credit Karma is a good place to start)
  • Save enough to cover at least 20 percent of your startup costs, along with money to live on before you’re profitable
  • Determine exactly how much you’ll need to borrow, and exactly how it will be spent
  • Determine how your investors will be repaid, if you decide to get investments versus traditional bank financing
  • Complete a sound business plan and accompanying pitch to show loan officers and investors the “proof” – that is to say, you have to show them how you’re going to make money, why your strategy will work, and how you will repay loans and offer returns on investments

Where can you get financing? Start with your personal bank or credit union, and stay local if possible. Local branches often offer greater flexibility than large corporate banking enterprises; at the very least, they’ll usually work with you to help you get in position to be approved for financing.

If you can’t get help from a local bank, you can try larger and/or business-oriented enterprises – just be sure to vet them carefully and to fully understand all loan repayment terms before you accept financing. Don’t let your excitement cause you to fall for a scam. NOTE: Be sure to look into SBA-guaranteed loans to help make your application more attractive.

If you want to find investors, start with family and friends. You might consider a crowdfunding campaign on IndieGoGo or GoFundMe. If you’re involved with your local Chamber of Commerce or a service organization such as Rotary or Kiwanis, ask around: chances are there are investors in the room that might be interested. If you can’t attract local investors, seek out angel investors using sites like Angel List and the Angel Capital Association.

How much does it cost to start a pizzeria?

Startup costs vary dramatically from one end of the spectrum to the other. Is your pizzeria going to be operated out of a small carryout with no dining area? Depending on your location, you might be able to go into business for $25,000 or less. Will you be launching an upscale pizzeria with a 3,500-square-foot building to seat 100 patrons? You could be looking at startup costs in excess of $500,000.

So many variables go into answering that question, it’s impossible to answer without research specific to your pizzeria. That’s why creating a business plan is so important; part of the process requires you to determine your startup and ongoing operating costs – including accounting for an initial period in which you might not be profitable.

In addition to those calculations, I recommend budgeting an extra 10 to 20 percent. This will give you the necessary cushion to weather unexpected expenses and emergencies.

Take the time to organize and properly file your pizzeria business, and you will almost certainly avoid headaches – and even business-killing challenges – down the road. When you get your business in order now, you can confidently focus on launching and growing your pizzeria for the future.